But let’s put “intelligence” on the x axis. How much does a
company learn from its customers? What kind of data do these
customers provide? How seamlessly and quickly does it improve the
user experience, like auto-populate your destination on Uber, or
suggest songs you’ll like on Spotify? Over the last five years, only
thirteen in the S&P 500 have outperformed the index each year—
evidence of our winner-take-all economy.^17 What do most of these
firms have in common? They use the peanut-butter-and-chocolate
combination of receptors (users) and intelligence (algorithms that
track usage to improve the offering).
This is tantamount to a car that becomes more valuable with
mileage. We now have a Benjamin Button class of products that age in
reverse. Wearing your Nikes makes them less valuable. But posting to
Facebook that you are wearing Nikes makes the network more
valuable. This is referred to as “network effects” or “agility.” Not only
do users make the network more powerful (everyone being on
Facebook), but also when you turn on Waze, the service gets better for
everyone, as it can geolocate you and calibrate traffic patterns.
Where should you work or invest? Simple: Benjamin Buttons.